Hans Sy, former president of SM Prime Holdings Inc., converses with fellow businessmen and public officials prior to a memorandum signing for a common Light Rail Transit (LRT) and Metro Rail Transit (MRT) train station, in Makati city, Metro Manila, Philippines January 18, 2017. SMPH announced that it filed with the Securities and Exchange Commission (SEC) an application for a permit to sell an issuance of P20 billion fixed-rate bonds.
REUTERS/Ezra Acayan

SM Prime Holdings, Inc (PSE: SMPH) recently announced that it filed an application for a permit to sell an issuance of P20 billion fixed-rate bonds with the Securities and Exchange Commission (SEC). Read on to learn more about it.

Here are three things to know about SM Prime’s plan to issue P20 billion in fixed rate bonds:

According to a press release from SM Prime, the P20 billion fixed-rate bonds issuance is part of SMPH’s shelf registration of fixed rate bonds worth P60 billion. This was approved by SEC ON July 8, 2016. The approval of the 3-year Debt Securities Program is under SEC MSRD Order No. 11 series of 2016, dated July 12, 2016.

2. SMPH’s application for a permit to sell for the issuance of fixed-rate bonds is actually comprised of P15 billion in seven-year series “G” bonds.

The seven-year series “G” bonds are due in 2024. SM’s issuance of fixed-rate bonds also has an oversubscription option of up to P5 billion.

PRS Aaa is Philratings’ highest rating. This means that the issuing company has an extremely strong capacity to meet its financial commitment on the obligations. It also denotes that such obligations have minimal credit risk and are of the highest quality. According to SMPH, PhilRatings also assigned a stable outlook for the ratings of the outstanding and proposed bonds.

SM Prime ’s consolidated revenues grew from P71.5 billion in 2015 to P79.8 billion in 2016. Meanwhile, its overall operating income grew from P31.4 billion in 2015 to P35.3 billion in 2016. The company’s recurring income also rose from P20.9 billion in 2015 to P23.8 billion last year.

“SM Prime sustained its overall performance in 2016 on the account of focusing more on recurring-income stream complemented by the solid performance of the housing group,” SM Prime President Jeffrey Lim said in a statement. “SM Prime is well-positioned to capture the positive impact of the higher infrastructure spending intended by the government that will also spur overall economic growth of the country.”

SMPH’s growth was attributed mostly to the continued expansion of its malls. In fact, its mall revenues went up from P44.5 billion in 2015 to P48.6 billion in 2016. Aside from this, the company’s rentals of housing units also improved by 10 percent.

SM Prime is poised to open seven malls in the Philippines in 2017, including SM Center Tuguegarao Downtown in April, SM Cagayan De Oro (CDO) Downtown Premier in May, SM Puerto Princesa in Palawan and SM Center Ormoc in Leyte.

What do you think of SM Prime’s plan to issue P20 billion in fixed rate bonds? Let us know your thoughts in the comments section below.

SM Prime Holdings, Inc. opened the SM CIty Tianjin, its seventh mall in China. The new mall expressed the company's confidence in China's economy and brought China a total of 9.1 million square meters of gross floor area.

Uncertainty looms around global markets as oil prices slip Monday due to an increase in the number of rigs from West Texas Intermediate. Adding to the worry is the possible exit of Britain from the European Union (EU).